Bressler Risk Blog

“Appeals court again rejects bid to dismiss Graham Weston lawsuit against former attorney” —

• “An Austin appeals court has again rejected a San Antonio attorney’s attempt to dismiss a lawsuit by Rackspace Technology Inc. co-founder and downtown developer Graham Weston, reaffirming that claims the lawyer worked against him by representing his estranged wife in their divorce can proceed.”
• “In a revised opinion issued Thursday after rehearing, the 3rd Court of Appeals left its decision unchanged but sharpened its reasoning, saying the lawsuit against San Antonio attorney Jason Davis and his firm centers on alleged conflicts and failures to disclose them-not protected legal speech under the Texas Citizens Participation Act. Davis argued the lawsuit should be dismissed under the act, saying the claims stem from his communications and legal work in investigating and pursuing his client’s claims in the divorce.”
• “Weston countered that his lawsuit is based not on protected communications but on Davis’ alleged conduct, including failing to disclose a conflict while representing opposing interests.”
• “Because Weston’s claims focus on Davis’ alleged conduct rather than his courtroom filings or legal advocacy, the court said they don’t qualify for dismissal under the act, which protects free speech and legal petitioning from retaliatory lawsuits.”
• “The revised opinion more clearly draws a line between protected legal speech and an attorney’s conduct toward a client, reinforcing that alleged conflicts of interest and nondisclosure fall outside the law’s protections.”
• “A trial court had disqualified Davis from representing Elizabeth Weston in the divorce, citing his prior work for Weston and finding a conflict of interest.”
• “In 2021, after Davis’ disqualification, Weston sued Davis and his firm, Davis & Santos, alleging they breached their fiduciary duty and committed fraud by agreeing to ‘secretly represent’ Elizabeth Weston while simultaneously representing him and three family companies.”
• “The appeals court ruling sends the case back to state District Court in Comal County, where Weston and a few family firms are seeking damages and the return of millions of dollars in legal fees paid to Davis over more than a decade. The appeals court did not determine whether Davis committed misconduct.”

David Kluft asks: “If I get an order to show cause that asks whether I used #AI, can I refuse to respond because my legal research is work product?” —

• “Two TN attorneys submitted briefs to the 6th Cir. with over two dozen fake citations and misrepresentations of the record, which appeared to have been generated by AI. The Court issued a show cause order asking, inter alia, who wrote the briefs, whether they used generative AI, and how they cite-checked the legal authorities.”
• “Instead of providing a substantive response to the show cause order, the lawyers claimed that the ‘attorney-client and work-product privilege excused compliance with the show cause order’ because compliance would reveal the ‘details of the Respondent attorney’s work product and practices.'”
• “The Court disagreed and held that, under the privilege and work product doctrines, ‘we may not compel the disclosure of a lawyer’s notes, prior drafts of briefs, or legal advice absent waiver … But the order to show cause sought no such thing. Whether and how the briefs were cite-checked does not implicate conversations regarding legal advice, nor do they ask for any work product of any kind.’ The lawyers were sanctioned with $15K each in fines, attorneys’ fees, and a disciplinary referral.”
• Decision: here.

“California Bar Proposes Rule Requiring Lawyers to Verify Every AI Output — and Five Other AI-Focused Ethics Changes” —

• “When using any technology — including AI — a lawyer ‘must independently review, verify, and exercise professional judgment regarding any output generated by the technology that is used in connection with representing a client.'”
• “That language appears in a new comment to Rule 1.1 on competence proposed by the State Bar of California’s Standing Committee on Professional Responsibility and Conduct (COPRAC) as part of a package of AI-related amendments to six of the state’s Rules of Professional Conduct.”
  “The proposed changes would, for the first time, write specific AI obligations into California’s rules. The changes span the rules on competence, client communication, confidentiality, candor toward tribunals, and supervision of both lawyers and other staff.”
• “The rulemaking was set in motion by the California Supreme Court itself. In an Aug. 22, 2025, letter to the state bar’s interim executive director, the court’s clerk and executive officer directed COPRAC to consider whether the guiding principles from the bar’s November 2023 ‘Practical Guidance for the Use of Generative Artificial Intelligence in the Practice of Law’ should be incorporated into the formal rules.”
• “The court also directed the bar to consider guidance specifically addressing ‘agentic AI’ tools — systems that can plan and execute tasks with little or no human intervention.”
• “COPRAC approved the proposed amendments at its March 13, 2026, meeting and opened the 45-day comment period. Rather than drafting a standalone AI rule, the committee wove new language into six existing rules, reflecting a view that AI sharpens existing ethical duties rather than creating entirely new ones.”
• “Whereas California’s 2023 practical guidance was a ‘living document’ with no binding authority, these proposed amendments would change that by making AI-specific obligations part of the enforceable rules.”
• “Most states that have addressed AI in legal practice have done so through ethics opinions, which carry persuasive but not always disciplinary force. California’s approach, if finalized, would be more muscular.”
• “I have tracked the adoption of the duty of technology competence across jurisdictions on a dedicated page on this blog. These proposals represent among the most detailed and comprehensive set of AI-specific rule amendments I have seen any state bar put forward.”
• “A new Comment 5 to Rule 1.4 addresses when lawyers must disclose their use of AI to clients. The proposed language provides that when a lawyer’s use of technology, including AI, ‘presents a significant risk or materially affects the scope, cost, manner, or decision-making process of representation,’ the lawyer must communicate ‘sufficient information regarding the use of technology to permit the client to make informed decisions regarding the representation.'”
• “The comment adds that lawyers must continue to evaluate their communication obligations throughout a representation based on ‘the novelty of the technology, risks associated with the use of the technology, scope of the representation, and sophistication of the client.'”
• “Amendments to Rule 1.6, Confidential Information of a Client. The confidentiality rule, which prohibits lawyers from revealing confidential client information, gets a new Comment 2 that expand sthe definition of ‘reveal’ to encompass AI use.”
• “Under the proposed language, ‘reveal’ includes ‘exposing confidential information to technological systems, including artificial intelligence tools, where such exposure creates a material risk that the information may be accessed, retained, or used, whether by the technological system or another user of that technological system, in a manner inconsistent with the lawyer’s duty of confidentiality.'”
• “This means that inputting client information into an AI tool — even if the lawyer never intends for anyone else to see it — can constitute a revelation of confidential information under the rules if there is a material risk the system or its other users could access, retain or use that data. Lawyers using cloud-based AI tools with unclear or unfavorable data retention and training policies need to pay attention to this.”
• “Amendments to Rule 3.3, Candor Toward the Tribunal. This amendment directly addresses the AI hallucination problem that has generated judicial sanctions and considerable alarm across the profession. A new Comment 3 states that ‘a lawyer’s duty of candor towards the tribunal includes the obligation to verify the accuracy and existence of cited authorities, including ensuring no cited authority is fabricated, misstated, or taken out of context, before submission to a tribunal, including any cited authorities generated or assisted by artificial intelligence or other technological tools.'”
  “The existing rule already prohibits knowingly misquoting authority or citing overruled decisions. The new comment makes explicit that AI-generated citations are not exempt from those obligations, and that the verification duty extends specifically to fabricated, misstated or decontextualized authority.”
• “Amendments to Rule 5.1, Responsibilities of Managerial and Supervisory Lawyers. The proposed amendment adds AI governance to the list of matters that managerial lawyers at law firms must address through internal policies and procedures.”
• “…the independent verification requirement in Rule 1.1 is worth emphasizing. It does not say lawyers should generally be careful with AI output. It says they must independently review, verify and exercise professional judgment regarding any output used in client representation. That is a strict standard, and one that cuts against any casual reliance on AI-generated work product.”
• “Third, the confidentiality amendment’s expansion of ‘reveal’ is practically significant. Lawyers accustomed to thinking of confidentiality as a disclosure-to-humans concept will need to rethink how they select and use AI tools in light of this definition.”
• “Although the comment period has closed, the rulemaking process continues. COPRAC will review public input and could modify the proposals before they advance. The California Supreme Court ultimately has authority over the Rules of Professional Conduct. Whether and when these amendments might take effect remains to be seen.”

“Courtroom Hug Gets Miami Judge DQ’d From Trump Library Case” —

• “A Miami-Dade state court judge is disqualified from overseeing further proceedings in the legal battle over a local college’s decision to donate its land for a Trump Presidential Library. An appellate panel found the judge showed bias toward the plaintiff by giving him a hug after a hearing, and seemingly thanking him for filing the suit. But some of the lawyers involved in the litigation say the judge’s removal from the case is unfair to her.”
• “The ruling from Florida’s Third District Court of Appeal takes Miami-Dade Circuit Judge Mavel Ruiz off plaintiff Marvin Dunn’s lawsuit against the Miami-Dade College Board of Trustees.”
• “Dunn sued after the trustees voted last year to donate a 2.6-acre property worth at least $67 million as the site of a planned presidential library for Donald Trump. Dunn, a local historian and one-time Miami mayoral candidate, alleged the board’s vote was not properly advertised under Florida’s public records laws.”
• “Ruiz initially blocked the land transfer, and set a trial date for August 2026. She ultimately dismissed Dunn’s suit with prejudice in January, but not before denying a motion by defense counsel to get her to step down from the case.”
• “According to defense counsel, the judge’s alleged actions at a December hearing showed bias toward Dunn.”
• “According to the transcript of the hearing included in the motion to disqualify Ruiz, the judge compared Dunn’s case to one filed ‘years ago,’ by a ‘gentleman’ who was a ‘pillar of the community’ that had sued a governmental agency that he ‘did not believe … was doing the right thing for the citizens of this community.'”
• “‘He [the plaintiff in that case] put his money where his mouth is. He came in second. He was not successful in that action, but in the order, this court wrote how important a member of this community is when they are willing to put themselves, their money and their home on the line for the better good. And that’s what you [Dunn] did, sir,’ Ruiz said. ‘It’s my understanding that you mortgaged your house to pay for the stiff bond that this court imposed on you and you did it. And I thank you.'”
• “After the hearing, Ruiz allegedly descended from the bench to shake hands and ‘exchange pleasantries’ with attorneys on both sides before she ‘briefly hugged’ Dunn, according to Dunn’s sworn declaration included in court records.”
• “Dunn’s attorneys, Andres Rivero of Rivero Mestre and Richard E. Brodsky of The Brodsky Law Firm, argued in a March filing that Ruiz’s ultimate dismissal with prejudice showed she was not biased toward their client, and claimed the embrace in question followed warm greetings to both parties and came at a point when the judge ‘obviously’ believed the case was over.”
• “But the per curiam panel opinion, signed by Judge Ivan F. Fernandez, Judge Thomas Logue and Judge Monica Gordo, held the evidence of bias was ‘legally sufficient to create in a reasonably prudent person a well-founded fear that they would not receive a fair hearing before the judge.'”
• “The appellate court also found Ruiz should not hear Dunn’s motion for reconsideration of her January dismissal.”
• “Meanwhile, Jesus M. Suarez, partner at Continental and attorney for the college, said ‘the trial court should have recused itself in the first instance.'”
• “Judicial ethics bar Ruiz from commenting on open cases, the court’s spokesperson, Eunice Sigler, noted.”
• “Ruiz is one of only two incumbent state court judges in South Florida who has drawn a challenger this election cycle.”

“Judge Who Laid the Groundwork for Trump’s Supreme Court Battle Used to Work for Him” —

• “The appellate judge whose dissent laid the groundwork for a Supreme Court intervention in E. Jean Carroll’s defamation case against President Donald Trump worked in the White House in 2019, when Trump made the defamatory comments. It’s an apparent conflict of interest that’s made even more relevant given the judge’s forceful defense of Trump’s actions at the time.”
• “Judge Steven Menashi, who authored the dissent, didn’t recuse himself from the case — nor does it appear in the court record that he ever revealed his proximity to Trump at the time. But his actions could result in the case being thrown out or even put taxpayers on the hook for the $83 million granted to Carroll following a 2024 civil trial in which Trump was found liable for defamation for denying that he sexually assaulted her.”
• “Carroll scored a temporary victory in her long-running fight against Trump on Wednesday, when a federal appeals court in New York said it would not reconsider one of two defamation cases against Trump. However, a lone Trump-appointed judge penned a dissent that could breathe new life into Trump’s side — without acknowledging his own time in the Trump White House.”
• “Menashi was a special assistant and associate counsel to the president in June 2019, when the administration put out a statement saying that Carroll was merely ‘trying to sell a new book’ and when Trump told a reporter on the White House lawn that ‘it’s a total false accusation and I don’t know anything about her.’ Jurors in Manhattan considered those two statements when they concluded Trump acted with malice and awarded Carroll a massive sum.”
• “The timing means that Menashi — who has been guarded about his interactions with Trump and whatever legal advice he gave the president — was working for the defendant in the case during the exact moment that led to the successful lawsuit.”
• “On Wednesday, the Second Circuit Court of Appeals refused Trump’s request to have the entire bench reconsider a smaller panel’s decision last year to uphold the massive punitive damages against Trump. That smaller panel had accused the president of ‘extraordinary and unprecedented conduct’ in his June 2019 statements against Carroll, supporting the view that he wasn’t shielded by presidential power when he did so.”
• “However, the decision also came with Menashi’s vociferous 54-page dissent, which planted the seeds for the Supreme Court to weigh in.”
• “In it, he criticized what he called ‘unauthorized damages, duplicative compensatory damages, and a grossly excessive monetary figure for a defamation claim.’ He also highlighted what he called ‘several errors’ in the case that made it ‘obvious that the president was acting within the scope of his office when responding to reporters at the White House.'”
• “Menashi also disagreed that Trump should be held personally liable in the case. Menashi wrote that it ‘made no sense’ for judges to block then-Attorney General Pam Bondi’s attempt to remove Trump and name the U.S. government as the defendant under provisions in the Westfall Act, which protects government employees from lawsuits while on the job — though the trial judge considered those arguments at length and even had appellate courts in New York and Washington, D.C. weigh in.”
• “But most importantly, he gave Trump’s lawyers the key phrase they need to get the Supreme Court’s attention, writing that the appellate’s support of Carroll ‘created a circuit split.'”
• “‘The Supreme Court may want to consider whether that is how the Westfall Act applies to the president,’ Menashi wrote.”
• “When Menashi was nominated to the bench in 2019, CNN surfaced editorials from his days as a columnist for the conservative New York Sun, in which he attacked feminists, gay rights groups and diversity efforts. He was lambasted by critics as ‘one of Trump’s most radical picks’ and accused of authoring ‘Trump’s worst policies for immigrants and women.'”
• “But Menashi refused to detail his work for the Trump administration, rebuffing questions from then-Sen. Dianne Feinstein about his interactions with White House aide Stephen Miller and declining to say whether he had anything to do with the administration’s policy that separated migrant families and children at the U.S.-Mexico border.”

David Kluft asks: “Can an IPO underwriter’s counsel be adverse to the stock issuer in a subsequent patent case?” —

• “Company A, a sleep apnea device maker, retained a financial services company (the Underwriter) to launch its initial public offering. The Underwriter was represented by a law firm (the Firm) [Latham], which reviewed Company A’s financial and product information as part of the due diligence.”
• “The Firm withdrew after coming to the conclusion that Company’s A’s product infringed Company B’s patents. The Firm later filed a patent infringement suit on behalf of Company B against Company A. Company A asked the Firm to withdraw, but it refused and instead implemented an ‘ethical screen.'”
• “Company A moved to disqualify the Firm. The Firm argued that it could not find ‘a single case where a court has disqualified underwriter’s counsel for being adverse to the stock issuer in a subsequent case.'”
• “However, the Court agreed that Firm A’s continued involvement in the case ‘would appear deeply improper’ given its ‘repeated and consistent’ access to Company A’s internal documents while representing the accounting firm. The Court further stated that even if the ethical wall worked and the litigation team received no confidential information, the ‘appearance of impropriety extends to the … litigation team here.'”
• “The Court found that although the Firm and Company A ‘never had an attorney-client relationship … this case is one of the likely few where the appearance of impropriety of a continued representation is so striking that disqualification must follow.'”
• Order: here.

“Private Equity in Law Firms: Trend, Impact, and Legality” —

• “Private equity (PE) has been circling the legal sector for years—but in the last 24 months, the pace has quickened, powered by regulatory openings in the United States (notably Arizona and Utah), a decade-plus of experience in the U.K. and Australia, and mounting investor interest in professional services cash flows. Yet, the U.S. landscape remains a patchwork. Let’s look at the trend lines, how PE is getting access, and the legality in key jurisdictions.”
• “PE’s interest in law firms mirrors its push into other professional services (accounting, physician practice management, engineering): predictable cash flows, high margins, low capex, and a highly fragmented market ripe for rollups and platform plays. After years of structural barriers, dealmaking efforts accelerated over the last 12 months, aided by creative structures and a slowly improving regulatory environment.”
• “Model Rule 5.4, widely adopted by states, restricts fee-sharing and nonlawyer ownership. The American Bar Association reaffirmed that the ban reflects the profession’s core values in Resolution 402 (Aug. 2022), even while it encourages evidence-based regulatory innovation in separate policy statements. That said, the door has opened in a few places: Arizona abolished its version of Rule 5.4 in 2021 and created a licensing regime for alternative business structures (ABS) entities, and Utah launched a supreme-court–supervised ‘regulatory sandbox’ in 2020, extended through 2027.”
• “Managed services organizations (MSOs) and contractual workarounds. In non-ABS states, PE gravitates to MSO structures: Investors own the business services affiliate—marketing, HR, tech, intake—while the professional entity remains lawyer-owned. Properly constructed, MSOs avoid impermissible fee-sharing and preserve lawyers’ independent judgment, but they must be engineered carefully to withstand scrutiny under Rule 5.4 and UPL statutes.”
• “Adjacent bets—litigation finance and alternative legal service providers (ALSPs). Some PE funds back litigation financiers or ALSPs that contract with firms, creating capital adjacency without owning the law firm itself. As a policy matter, critics argue this still raises independence and conflict concerns if investors push for early settlement or aggressive portfolio economics; proponents counter that funding increases access to justice. The ethics literature has long flagged investments that intertwine with client matters as conflict-prone.”
• “The ABA House’s 2022 Resolution 402 distilled a long-standing concern: Outside owners may pressure firms to prioritize returns over professional duties, risking client confidentiality, conflicts, and independence. That resolution reaffirmed feesharing limits as core to the profession, even while keeping the door open to measured experimentation.”
• “ABS regimes commonly require designated compliance officers, suitability checks on nonlawyer owners, and firmwide undertakings to abide by professional rules. Arizona’s ABS framework mandates a compliance lawyer and disclosures for ‘authorized persons,’ while D.C.’s long-standing Rule 5.4 variant allows limited nonlawyer partners who provide professional services and agree to be bound by ethics rules—a narrow exception that has functioned without headlines for years.”
• “Whether PE invests directly or via MSOs, firms must enhance conflicts-checking to capture investor-level affiliations, portfolio company ties, and data-sharing risks. Ethics authorities have long warned that lawyers’ financial entanglements with clients or third parties heighten malpractice and fiduciary risks—lessons that carry over to investor relationships.”
• “Model Rule 5.4 baseline (most states). No nonlawyer ownership, no fee-sharing with nonlawyers (with narrow exceptions such as employee profit-sharing and payments to a deceased lawyer’s estate). Outside investors cannot own law firms or control legal practice.”
• “Critics argue that opening equity to nonlawyers risks subordinating the lawyer’s role as officer of the court to investor imperatives. The ABA’s 2022 resolution reanchors this value proposition, warning that incremental erosion of Rule 5.4 could ‘destroy our profession’ to the detriment of clients if not carefully checked.”
• “Advocates of targeted reform, including academics and APRL, contend that ethical independence can be preserved through governance, while capital is essential to scale consumer-facing innovation and improve access to justice—especially given the U.S.’s poor rankings on affordability of civil legal services. Their proposals seek informed consent-based fee-sharing and regulated ownership with enforceable independence safeguards.”

“States Consider Bans on Private Equity Law-Firm Acquisitions” —

• “Private equity has barely begun investing in law firms, but the backlash has already started. Lawmakers in three states are considering bills to make it harder for buyout firms and other corporate investors to buy law practices, a burgeoning investment strategy that was long off limits for private equity.”
• “In California and Illinois, legislators in April advanced bills that would cement prohibitions on nonlawyers’ owning or controlling legal practices. In Colorado, a bipartisan group of lawmakers introduced a similar bill last week, which on Wednesday passed the House Judiciary Committee.””California Assembly Bill 2305, which the state’s lower chamber approved on April 6, will ‘close the loopholes’ corporate investors use to influence legal practices, said Assemblymember Ash Kalra, who introduced the bill.”
• “Kalra, a Democrat who represents San Jose and neighboring areas, fears that private-equity money may reshape the legal profession like it has the medical sector and other industries. He thinks the bill has the support it needs to pass California’s state Senate by the Aug. 31 end of the legislative session. ‘We have seen how private equity has operated in many different industries to extract profit and not reinvest in the long-term health of the industry,’ Kalra said. “
• “His bill will ‘ensure that lawyers make decisions based on their clients’ best interests, not the best interests of their investors,’ he said”
• “But while it remains forbidden for private equity to directly own law firms in almost all states, firms have developed workarounds to control practices without violating the rules. Private-equity investors have realized that the same structure that allows them to invest in medical practices—the management-services organization, or MSO—can be repurposed to invest in legal practices.”
• “The interest is on both sides, as more lawyers reconsider their commitment to professional autonomy. The prospect of artificial-intelligence tools’ reshaping the profession has convinced some firms to seek outside capital to invest in technology and operations.”
  Private-equity deal activity is increasing, though mostly for smaller consumer-facing law firms or AI-focused startups rather than brand-name corporate firms. Blackstone, for instance, invested in AI law firm Norm Ai. In January, fledgling private-equity firm Uplift Investors acquired Louisiana personal-injury firm Dudley DeBosier Injury Lawyers.”
• “Activity is continually increasing, though few deals are made public, said Trisha Rich, a partner at law firm Holland & Knight who helps structure MSO investments. Rich says she has completed 15 MSO transactions in the past six months and is working on about a hundred more.”
• “But just as private-equity investment is coming under scrutiny in the healthcare sector, more critics are asking whether this wave of private equity money will improve the legal profession.”
• “‘I don’t want private-equity investment in law to have the same consequences we’re seeing in the healthcare industry,’ said Colorado State Sen. Lindsey Daugherty, a Democrat who co-sponsored the bill in the Senate. Daugherty, who represents suburbs northwest of Denver, says she is already seeing evidence of more out-of-state corporate investment in Colorado’s legal field.”
• “The California bill, for instance, has the backing of the Consumer Attorneys of California, a lobby group. Saveena Takhar, senior legislative counsel for the Consumer Attorneys of California and a lobbyist for the bill, said she is not certain how much private-equity money is flowing into California’s legal field, but there are some indications—an increase in attorney advertising, for instance—that it is significant.”
• “This raises the possibility that undisclosed financial interests could be compromising the attorney-client relationship, she said. ‘Part of the problem is how opaque this all is,’ Takhar said.”
• “In Colorado, a bipartisan group of legislators on April 21 introduced their own bill, which among other changes would prohibit law firms from sharing revenue with nonlawyers. The bill has until May 13 to be approved by both chambers.”
• “The Illinois General Assembly in April passed a similar bill to bar private-equity interference in legal practices, and the measure is now under consideration in the Senate. “

David Kluft asks: “Did Microsoft Teams AI just secretly record my meet and confer with opposing counsel?” —

• “After the Court ordered the parties in a California federal litigation to meet and confer over an issue, Plaintiff’s counsel filed a report with the Court in which they accused Defendant’s counsel of making certain admissions during the call. As proof of these admissions, Plaintiff presented ‘transcripts that appear to have been automatically generated by an Artificial Intelligence tool associated with the video conference software (Microsoft Teams) utilized by the parties,’ which turned out to be Otter.ai.”
• “Defendant objected on the grounds they were ‘completely unaware that it was being recorded until after the meeting ended and an email permitting a download of the transcript was provided.’ It turns out that Plaintiff was also unaware of the recording and received the same email, and thought Defendant had somehow triggered the AI.”
• “The Court, careful to put the word ‘transcript’ in quotes, saw ‘no reason to engage in greater depth in the resulting disputes over the ‘transcript’ because: (1) neither party appears to have known enough about Otter.ai to have used it deliberately in an unlawful or improper way; and (2) the Court will not consider … any arguments based upon those ‘transcripts’ for the simple reason that no party has made any effort to demonstrate its accuracy or trustworthiness.'”
• Order: here.

“Chancery Imposes Attorneys’ Fees for Breach of Confidentiality Order” —

• “The Delaware Court of Chancery recently imposed attorneys’ fees in connection with a request for sanctions for violation of a Confidentiality Order in the matter styled Accelerant Twister, LLC v. Marjo, LLC, C.A. No. 2023-0887-LWW (Del. Ch. April 10, 2026).”
• “This short letter ruling followed a prior decision in this case to disqualify a putative expert, based on the court’s finding that there was a ‘meaningful failure to obey the clear terms’ of the governing Confidentiality Order. Slip op. at 2, n.2 (citing transcript of rulings from the bench after a hearing on January 23, 2026).”
• “During that hearing, after briefing, the court found that over 300-pages of confidential material were submitted to a designated expert nearly six months before the expert executed the required undertaking. Id.”
• “The court awarded reasonable attorneys’ fees incurred in ‘bringing and briefing’ the motion for sanctions as a remedy. Id.”
• “In the prior Bench Ruling, the court found that a conflict of interest provided grounds for disqualification based on the prior representation of one of the parties. The court also found that the Confidentiality Order was flouted by disseminating sensitive material to the putative expert months before he agreed to be bound by it. The award of attorneys’ fees was necessary to cover the time spent to investigate the violation and to litigate the contumacious behavior. Slip op. at 3.”
• “After a discussion about the reasonableness of hourly rates, the court concluded that a blended rate of just over $1,000 was reasonable under the circumstances, referring to Rule 1.5 of the Delaware Lawyers’ Rules of Professional Conduct and the economic survey for hourly rates conducted by the American Intellectual Property Law Association. Patent-related issues in this case were integral, and the attorneys who performed the work had specialized skills in various other areas of the law. The partners involved ranged in experience from 12 through 40 years of practice.”

“AI Is Taking Over Audit Functions. Accounting Needs to Get Ready” —

• “KPMG’s rollout of advanced artificial intelligence agents is the start of something structurally significant: a ‘K-shaped’ remodeling of professional services, in which the top accelerates, the bottom collapses, and the distance between them becomes the competitive question.”
• “Last week’s news that KPMG is cutting roughly 10% of its US audit partners is the K-shape made literal. The average partner whose economics rested on leverage rather than origination is being removed. The pyramid is being compressed from both ends at once. Graduate hiring is being switched off at the bottom, and the average partner is being asked to leave at the top.”
• “Thomas Mackenzie, KPMG’s audit chief technology officer, recently said that within two to three years there will be ‘next to no human beings’ performing routine audit testing at KPMG. This is the most honest thing any Big Four leader has said about the direction of the profession this year. Vouching, transaction testing, and other tasks that for decades defined early-career life in public accounting are being absorbed by AI agents.”
• “But what does this do to the pipeline that produced every audit partner currently signing opinions? Audit has always developed judgment through repetition—exposure to hundreds of small misstatements before forming a view on a material one. Remove this type of apprenticeship and you have removed the mechanism by which the profession reproduces itself.”
• “Mackenzie’s own framing was telling. He said he will no longer hire a college graduate to create workpapers. That is a reasonable shift in job design and a complete rewrite of the conditions under which professional judgment has historically been developed.”
  K-shaped Remodeling”
• “The upper arm accelerates. Exceptional partners do more because clients buy them rather than the firm behind them, and AI amplifies their output rather than substituting for it. The lower arm collapses due to commoditized delivery work, time-and-materials billing, standardized compliance output, and the average partner whose economics rested on leverage rather than origination. AI actively widens the gap between the two because the tools that amplify the top are the same tools that substitute for the bottom”
• “This plays out at a firmwide level, and we are seeing it in real time. Looking at the first-quarter 2026 data, firms that have already made the shift to their operating models are clearly outgrowing those that haven’t.”
• “This is a pricing reset. The bottom half of the market becomes cheaper, faster, and harder to differentiate. The top becomes more expensive, more concentrated, and more dependent on individuals rather than institutions.”
• “In audit, the partner is amplified, the senior manager is divergent, and the associate is substituted. Each category carries a different economic, organizational, and talent implication. The firms that are planning workforces at firm-average level rather than role-by-role are going to find themselves with the wrong people in the wrong places by 2028.”
• “The KPMG news signals a deeper shift: that the old assumption about professional services growing as a tide that lifts every firm equally is over. The firms pulling ahead share a recognizable profile.”
• “They are private equity-backed or well-capitalized; their leadership that has translated conviction into decisions rather than working groups. They are already rebuilding workflows around AI, creating proprietary intellectual property on top of foundational models and restructuring compensation to attract the partners the emerging model requires.”
• “The private equity community has moved past the question of whether AI disrupts professional services. It is underwriting assets on how seriously and how early management acted. If a firm is still in the monitoring phase, it has already answered the question—just not in the way leadership thinks it has.”

Bill Freivogel has been busy indeed spotting interesting updates!Presented with our thanks are several of his April highlights:

• Chaowai 101 AOA LLC v. 101 A of A LLC, 2026 NY Slip Op 31493(U) (N.Y. S. Ct. N.Y. County April 9, 2026).
  • “Very complicated LLC ownership case. Law Firm started representing an LLC that owned a NYC building. Resulting from a number of disagreements, Law Firm wound up not representing the LLC/owner, but representing a prospective new member of the LLC/owner. LLC/owner moved for Law Firm to turn over its files relating to this matter and to disqualify Law Firm from representing the new LLC member”
  • “In this Order the justice ordered Law Firm to turn over certain of its files, but not others, and ordered Law Firm not disqualified from representing the new LLC member.”
• In re Arbit, 2026 WL 1078065 (Fed. Cir. April 21, 2026).
  • “Individuals A, B, and C are ‘named inventors’ of the patent in question (‘the Patent’). C filed this case against A and B ‘for correction of inventorship,’ to establish C as the sole inventor of the Patent. Evidently, A and B would like to sell their interest in the Patent to Lincoln Diagnostics (‘Lincoln’).”
  • “Lincoln is paying A and B’s legal fees for this case. When C learned of Lincoln’s role, C moved to disqualify the law firm (‘Law Firm’) for A and B. C did not claim he was a former client of Law Firm.
  • “The magistrate judge granted the motion to disqualify, and the district judge affirmed. In this Order the Federal Circuit denied A and B’s petition for mandamus (affirmed the district court). The court discussed primarily N.J. Rule 1.8(f)(2), which deals with abuses from litigants’ accepting compensation from non-parties. [Our note: No one raised or discussed standing. We get how these payment arrangements can be abused, but nowhere has C shown how this arrangement threatens the fair administration of justice, or how he is otherwise prejudiced.]”
• N.L. v. J.D, 2026 NBKB 77 (CanLII) (Ct. K.B. N.B. April 20, 2026).
  • “Mother and Father are litigating an issue relating to their child. Lawyer, at Firm 1, represented Mother for several months. Lawyer then moved to Firm 2, which represents Father.”
  • “Mother moved to disqualify Firm 2. In this Decision the court denied the motion. Before Lawyer’s move, Firm 2 began erecting a screen between Lawyer and the lawyers representing Father including instructing personnel on their contacts with each other, maintaining locked files and so forth, all in compliance with New Brunswick Rule 3.4-20.
• Boyd v. H&R Accounts, Inc., No. 25-12834 (E.D. Mich. April 17, 2026).
  • “Plaintiff, represented by Lawyer, is suing a debt collection agency (‘H&R’) for violating debt collection laws. H&R moved to disqualify Lawyer because Lawyer had previously represented debt collection agencies affiliated with H&R in matters substantially related to this one.”
  • “In this thoughtful and comprehensive opinion the court granted the motion to disqualify. Lawyer had never represented ‘directly’ H&R or its corporate parent. However H&R has been a member of a closely related collection of agencies, a several of which Lawyer has represented in a number of cases.”
  • “The issues in those cases were largely similar to the issues here. A number of corporate officials have overlapped with various of these agencies, including the ‘Chief Compliance Officer,’ with whom Lawyer has worked closely. In short, ‘the Court finds that no amount of effective and careful lawyering can obviate the concerns raised in this case.'”
• Pan-Oceanic Eng’g Co., Inc. v. Grange Mut. Ins., 2026 IL App (1st) 250511-U (Ill. App. April 14, 2026).
  • “Illinois prohibits casualty insurers from insuring punitive damages in many situations. In this case an insured went to trial in a vehicle accident case facing claims of compensatory and punitive damages. One of several issues was whether the insurer’s retained ‘panel counsel’ (‘Lawyer’) had a conflict of interest.”
  • “In this opinion the appellate court described the ways Lawyer did have a conflict. Lawyer had previously alerted the insured of the advisability of hiring independent counsel, but the insured agreed to allow Lawyer to proceed for insured.”
  • “The court held, given the conflict, the insurer must pay Lawyer an hourly rate greater than that of panel counsel. We are not giving you the full picture, given the limitations of this site. The court’s discussion is totally about Illinois insurance law and seems of limited use elsewhere.”

David Kluft asks: “Can I get the judge recused at the last minute by hiring his best friend as my lawyer?” —

• “In a CA business dispute, the defendant was initially represented by some big firms, but then after years of discovery looked for a local litigator to join the trial team. The litigator they hired was a ‘close personal friend’ of the presiding judge and knew his appearance would cause the judge to recuse himself.”
• “The defendant waited to file the litigator’s appearance until four months later, after some motions had been ruled on. The judge as predicted recused himself.”
• “Plaintiff moved to disqualify the lawyer and reassign the case back to the original judge. The Court noted that the motion essentially accuses opposing counsel of violating Rules 3.2 (delay), 3.5 (disruption) & 8.4(d) (conduct prejudicial to the administration of justice). The Court denied the motion because the appearance of new counsel did not disrupt any pending motions and there was no evidence it was done for purposes of delay.”
• Decision: here.

“The Rising Utilization of Hybrid Dispute Resolution Procedures and Potential Ethical Concerns” —

• “As commercial litigators face mounting pressure to resolve disputes efficiently and expeditiously, hybrid dispute resolution mechanisms have become increasingly prevalent. Many commercial contracts now contain what are commonly referred to as ‘step clauses,’ requiring parties to first attempt mediation and then proceed to arbitration if mediation proves unsuccessful. Among the various hybrid procedures available is the option to engage in processes commonly referred to as arb-med or med-arb. In these structures, the parties may begin in arbitration and later pivot to mediation, or vice versa.”
• “At first glance, these arrangements may appear uncontroversial. However, depending upon the order in which the process is structured, significant ethical concerns and challenges may arise, particularly when the same individual is tasked with serving as the neutral in both roles. This hybrid model, particularly in its ‘pure’ form where the same neutral mediates and later arbitrates, rests on a structural flaw. Once a neutral mediates a dispute, that neutral cannot later serve as arbitrator without compromising confidentiality, impartiality, and due process. No amount of advance waiver cures that defect.”
• “To fully understand the issue, one must first examine the distinguishing features of each process. In mediation, parties are encouraged to ‘bare all’ to the mediator in order to maximize the effectiveness of the process. This may include sharing litigation strategy, settlement positions, assessments of the strengths and weaknesses of the case, business or reputational concerns, and other confidential information that would never be presented openly in court.”
• “The disclosure of this type of information enables the mediator to function in part as a case evaluator, assisting the parties in exploring their BATNA (best alternative to a negotiated agreement) and WATNA (worst alternative to a negotiated agreement). The core of the mediation process depends upon the confidentiality of information shared with the mediator and the mediator’s candor with the parties.”
• “During mediation, the neutral engages in private ex parte communications with all parties, including both clients and counsel. The mediator becomes the repository of information, sharing only what the parties expressly authorize. At no point does the mediator decide the dispute. Even when a mediator’s proposal is offered, it is not necessarily a formal case evaluation, though evaluative components may be present.”
• “Arbitration, by contrast, functions much more like a judicial proceeding. While the arbitrator is neutral in the sense of having no affiliation with either side, the arbitrator is ultimately charged with making a determination. At some point, the arbitrator must assess the evidence, apply the governing law, and render a decision.”
• “Just as in court, the arbitrator must remain insulated from confidential communications, private party strategies, or any information not formally presented as evidence. Arbitrators cannot engage in ex parte communications with the parties, the very practice that forms the cornerstone of mediation, and they do not engage in private interactions with clients outside the formal proceedings.”
• “This raises a fundamental question: how can the same neutral perform both roles without compromising the integrity of the process? Can the neutral begin as a mediator and later become an arbitrator, or can an arbitrator transition into the role of mediator for the same dispute?”
• “The problem arises if the mediation fails and the parties attempt to return to arbitration with the same neutral. The same concern exists when the process begins with mediation and then transitions to arbitration with the same individual. In either scenario, the neutral is no longer truly neutral. Having served as mediator, the neutral possesses information not in evidence, not subject to cross-examination, and potentially not equally disclosed to both parties. The neutral can no longer serve as a true fact-finder without compromising the adjudicative role.”
• “Parties would never present to an arbitrator the same information they freely disclose to a mediator. When the mediator becomes the arbitrator, the neutral now possesses confidential information unavailable to one side in the formal proceeding. This may include settlement flexibility, perceived weaknesses in a party’s case, emotional or reputational pressures, and strategic considerations. Such information cannot simply be ‘unlearned.'”
• “Some commentators have suggested that parties may waive any perceived conflict through advance agreement. However, such waivers provide limited protection. If the arbitration proceeds with the same neutral after an unsuccessful mediation and one side ultimately loses, as inevitably happens, there is a substantial risk that the losing party will suspect that the decision was influenced by confidential disclosures. Under New York law, evident partiality remains grounds for vacatur. That risk cannot be fully eliminated through contractual drafting. Indeed, the process itself may become vulnerable to challenge, thereby undermining the adjudicative role of the neutral.”
• “Moreover, the concept of informed consent is often illusory. Parties frequently fail to appreciate the psychological impact that confidential disclosures may have on subsequent decision-making.”
• “Even experienced lawyers may underestimate how knowledge of settlement ranges or strategic weaknesses can shape a final award. Consent to a structural conflict does not eliminate the conflict itself.”
• “Due process concerns also remain, even with waiver language. A party cannot meaningfully rebut information privately disclosed by the opposing side during mediation. The evidentiary boundaries of the arbitration effectively dissolve, creating a record that cannot be properly tested. The resulting award may therefore be vulnerable to challenge based on evident partiality or procedural unfairness. The confidentiality rules governing mediation and arbitration exist precisely to preserve the integrity of each process.”
• “One might ask why this is even a concern when the solution appears simple: change the neutral. While that solution seems straightforward, there remains pressure in some cases to maintain the same neutral throughout the process. In part, this stems from economic considerations. A neutral who is already familiar with the facts and nuances of the case may reduce costs and increase efficiency. The parties may also become comfortable with the neutral and confident in his or her understanding of the dispute.”
• “More cynically, some parties may believe they have influenced the neutral’s perception of their case and therefore expect a favorable outcome. For that very reason, however, the practice is fraught with risk. Any resulting award may be vulnerable to challenge based on claims of evident partiality or procedural unfairness.”
• “Courts generally view adjudicative processes that blur the line between ex parte communications and decision-making authority with skepticism. Ethical codes typically discourage ex parte communications in arbitration, while mediation rules often prohibit mediators from reporting to decision-makers. Med-arb and arb-med constructs risk collapsing these distinctions. Attempting to contract around such fundamental procedural protections through waiver provisions is simply poor risk management.”
• “Some proponents argue that this hybrid process is no different from situations in which a judge conducts a settlement conference and then presides over the trial. However, the analogy is imperfect. Judicial settlement conferences have themselves been criticized for creating concerns about impartiality. Lawyers often report discomfort with judges who both encourage settlement and later adjudicate the dispute.”

“Norton Rose Fulbright sued for malpractice over botched patent application” —

• “A defunct advertising-data company has sued law firm Norton Rose Fulbright in Illinois state court, accusing its lawyers ​of mishandling a patent application and neglecting to inform the ‌company about it for years.”
• “Veil Global Technologies, formerly known as Advocado, said in a lawsuit filed on Tuesday that Norton Rose hid its mistakes and cost the ​company valuable patent rights, requesting at least $100 million in ​damages from the firm.”
  Norton Rose said in a statement on ⁠Wednesday that it intends to ‘vigorously defend the case in court, ​where the facts and law matter.’ Attorneys for Veil declined to comment.”
• “Veil, then ​Advocado, hired Norton Rose in 2022 to handle its application for a U.S. patent covering technology for predicting the outcomes of marketing campaigns. Veil said in ​the lawsuit that Norton Rose failed to pay a required fee ​at the U.S. Patent and Trademark Office later that year, which led to ‌the ⁠office withdrawing the application.”
• “According to the complaint, Norton Rose unsuccessfully tried multiple times to revive the application between 2022 and 2025. Veil said that Norton Rose acted as if the application was viable the ​whole time and ​did not inform ⁠the company about any of its failures until 2024.”
• “Veil accused the firm of legal malpractice and ​breach of contract. The lawsuit said that the company ​lost licensing ⁠opportunities, market exclusivity and other business interests based on the firm’s conduct.”

“Phila. Judge Denies Second Recusal Bid in Zantac Suit for Wife’s Ties to Blank Rome” —

• “A Philadelphia judge overseeing the sprawling Zantac mass tort has declined to step aside once again over his wife’s law firm’s ties to the litigation.”
• “Keller Postman represents Roberto Jimenez and other plaintiffs, who moved in December for Roberts to recuse himself from the case over his wife’s connection to Blank Rome after she began working there as a partner in February 2025. The plaintiffs noted that Blank Rome represents one of the defendants, Apotex Corp., in a separate case in the mass tort.”
• “This week [4/21], Roberts rejected the recusal motion, noting that although his wife is a partner at Blank Rome—which represents Apotex Corp., a defendant in one of more than 550 Zantac cases—Apotex is not a defendant in the present case, eliminating any basis for recusal.”
• “He also emphasized that Keller Postman does not represent the plaintiffs in the only case involving Apotex, Hilbert v. Boehringer Ingelheim, which was filed by Anapol Weiss. Roberts explained that Blank Rome entered the Hilbert case in 2021 and that his wife did not join the firm until February 2025, which Roberts said he disclosed that same month.”
• “He concluded that any recusal request was waived because Anapol Weiss never sought recusal, and that Keller Postman waited too long to seek recusal by waiting until December to file the present motion for recusal.”
• “Even assuming Keller Postman could properly raise the issue, the judge emphasized that Pennsylvania law presumes judges are ‘honorable, fair and competent’ and capable of determining whether they can rule impartially. After a ‘conscientious determination,’ Roberts concluded he could manage the Zantac mass tort impartially and without personal bias or interest. He noted that his role in the mass tort is largely administrative and that his wife does not represent Apotex in any matter in any jurisdiction.”
• “Roberts also said that his wife has been ‘walled off from having anything to do with Apotex,’ that her ‘compensation has no direct relationship to the amount of fees or income that Blank Rome earns from Apotex,’ and that her compensation from the firm ‘is not tied to Blank Rome’s representation of Apotex.'”
• “Plaintiffs’ counsel was also involved in a separate recusal motion filed against Roberts in 2024 in a separate suit in the litigation, Jimenez v. GlaxoSmithKline. The plaintiffs argued that Roberts’ wife’s ties to her then-firm, Reed Smith, which represented Zantac manufacturer GlaxoSmithKline in litigation over the drug in other states, meant he should step aside.”
• “While they argued that his wife’s connection to GSK could create the appearance of impropriety, Roberts denied the motion after ruling that he could remain impartial in the litigation.”
• “‘The position advocated by plaintiffs has the potential to substantially and considerably impact judicial administration and case assignments throughout the commonwealth of Pennsylvania, at all judicial levels,’ Roberts held in his 2024 order.”

“Reinsurers Say Arbitrator DQ Bid Should Stay In Federal Court” —

• “Reinsurers are urging a New York federal court not to heed a Farmers unit’s request to remand its suit seeking disqualification of an arbitrator from an asbestos coverage fight, arguing the insurer wrongly framed the dispute as an attorney ethics matter.”
• “Truck Insurance Exchange’s claim that a New York attorney’s work for the insurer more than two decades ago bars him from serving as an arbitrator in the coverage fight fall squarely within the purview of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention, according to the Friday opposition brief.”
• “At one point, the reinsurers fired back at Truck’s argument that the case belongs in state court because it involves ‘important matters of New York attorney ethics.'”
• “‘Although Truck would like to cloak its complaint in the garb of attorney ethics, this case has nothing to do with New York’s administrative process for adjudicating purported ethics violations,’ the reinsurers said. Their bid to dismiss Truck’s complaint remains pending in the court.”
• “The present case involves the reinsurers’ selection of New York attorney Jonathan Rosen to serve on the arbitration panel set to consider claims that reinsurers — including certain underwriters at Lloyd’s London, Tenecom Ltd. and Dominion Insurance Co. Ltd. — wrongly withheld millions of dollars’ worth of payments for underlying asbestos injury suits against Truck’s insured.”
• “In its complaint, originally filed in state court and later removed to the Southern District of New York, Truck argues Rosen should be disqualified from the arbitration panel because he advised Truck on its contracts with the reinsurers in 2003. The complaint also brings a claim for breach of fiduciary duty against Rosen.”
• “Seeking to remand the suit to state court, Truck argues the federal court did not have jurisdiction to hear the dispute under the New York Convention.”
• “Even if it did, the case ‘cries out for abstention’ under the Burford doctrine, which directs federal courts to abstain if their adjudication would disrupt state efforts to establish coherent policy on matters of substantial public concern, Truck argues, telling the court the case implicates the ethical duties of attorneys licensed in New York.”
• “Characterizing that argument as a ‘Hail Mary,’ the reinsurers told the court Friday that applying the Burford abstention doctrine would be ‘categorically improper’ in part because Truck did not bring claims concerning the New York Rules of Professional Conduct.”
• “The reinsurers argue the case instead falls squarely within federal district court’s jurisdiction under the New York Convention because it is ‘intertwined’ with the underlying arbitration proceeding and relates to an arbitration agreement subject to that statute, thus meeting jurisdictional requirements under Sections 203 and 205 of the statute.”

“Anapol Weiss Disqualified From $12M COVID Test Dispute Over Conflict Tied to Former Defense Lawyer” —

• “A Chester County judge has ousted Anapol Weiss from a $12 million COVID-19 antibody test contract dispute after finding that the firm violated Pennsylvania’s Rules of Professional Conduct by hiring an attorney who previously represented the defendants without implementing a timely ethical screen, or providing required notice.”
• “On Friday, Chester County Court of Common Pleas Judge Cheryl Austin granted a motion to disqualify Anapol Weiss after biotech company Advaite Inc. and its CEO, Karthik Musunuri, alleged the firm’s hiring Ashley Ann Garland created a conflict because she had previously worked on the case as a lawyer with Mitts Law, a small, business-side boutique.”
• “The case, County of Chester v. Advaite, stems from Chester County’s claim that it entered into a $20 million contract with Advaite for 1 million COVID-19 antibody kits, but the company failed to deliver the tests on schedule, allegedly resulting in approximately $12 million in losses.”
• “The defendants argued that Garland had previously represented them in the litigation while she worked at Mitts Law, claiming she devoted more than 2,000 hours to their case and that she became familiar with their confidential information and litigation strategy.”
• “According to the defendants, Garland left Mitts Law in 2025 and briefly worked as a public defender before joining Anapol Weiss, which represents the opposing party. They claimed that Garland failed to notify them or provide written notice that an ethical screen had been imposed, and that this move violated Pennsylvania’s Rules of Professional Conduct.”
• “The defendants further alleged that Garland’s alleged conflict applied to the entire firm, and that any ‘after-the-fact’ ethical wall is legally insufficient. Given that Garland had played a central role in the litigation, all of Anapol Weiss, a 32-lawyer plaintiffs firm, should be disqualified, they argued.”
• “Austin agreed, concluding that Rule 1.10(b) was violated because Garland had allegedly been extensively involved in representing the defendants while employed at Mitts Law and then later joined Anapol Weiss without providing the required notice or screening measures. Because those steps are mandatory under Rule 1.10(b) when a lawyer switches sides in a matter involving materially adverse interests, the violation warranted disqualification, the judge said.”

“Pullman & Comley Accused Of Acting As Town’s Tax Office” —

• “A Connecticut taxpayer has filed a proposed class action against Pullman & Comley LLC, one of its attorneys, the town of Woodstock and its official tax collector, accusing the town of illegally delegating authority and the firm of overstepping while working as an arm of the tax office.”
• “In a complaint filed Monday in Connecticut state court, Woodstock resident Neal R. Syriac alleged the town hired Pullman & Comley attorney Adam J. Cohen to ‘perform the tax collector’s statutory duties,’ such as mailing tax sale notices, communicating warnings, conducting auctions, preparing deeds and imposing fees. Syriac said those duties cannot be delegated under Connecticut state statutes and must be performed by the actual municipal tax collector.”
• “‘The firm’s business model depends on performing non delegable governmental functions,’ Syriac said of Pullman & Comley.”
• “‘These actions are not legal services; they are governmental acts performed without statutory authority,’ he added.”
• “The town tax collector declined to comment Tuesday. A Pullman & Comley spokesperson had no immediate comment.”
• “In his eight-count complaint, Syriac alleged Cohen and the law firm violated the Connecticut Unfair Trade Practices Act and assumed without legal authority duties reserved for the tax collector. He also accused Cohen and Pullman & Comley of negligence per se, and aiding and abetting the town’s conduct.”
• “The town and tax collector Nora Valentine are accused of violating Syriac’s due process rights.”
• “All the defendants — the law firm, the attorney, the town and the tax collector — are accused of civil conspiracy. Additional counts seek judgments deeming the alleged delegation illegal and voiding any tax notices ‘issued by private actors.’ Syriac also seeks an injunction banning Pullman & Comley from performing any duties under Section 12-157 of the Connecticut General Statutes, which details tax sale procedures.”

David Kluft asks: “Can I mediate a dispute and then later be adverse to one of the mediating parties in a substantially related dispute?” —

• “A lawyer served as a mediator between a sister and brother fighting over a loan that the sister’s LLC made to the brother.”
• “Another LLC member (Plaintiff) later sued the sister, alleging that the outcome of the mediation (forgiving the loan) was a misuse of LLC assets. One of the lawyers who appeared for the plaintiff in the new lawsuit was the mediator in the prior dispute between the siblings. The sister moved to disqualify the lawyer pursuant to Rule 1.12, which provides that a lawyer cannot represent someone if they previously participated as an adjudicator in the same ‘matter.'”
• “The plaintiff argued that the mediation, even though ‘substantially related’ to the lawsuit, was not the same ‘matter.'”
• “The trial judge actually bought this argument and refused disqualification, but the court of appeals reversed, holding that Rule 1.12’s definition of ‘matter’ is ‘not limited to the same specific case over which the adjudicative official, here a mediator, previously presided.'”
• Decision: here.

“Rehab Programs Seek To DQ Participant’s Counsel In Pay Suit” —

• “Several Texas-based addiction recovery program operators urged a federal court to disqualify a program participant’s counsel in a Fair Labor Standards Act lawsuit, arguing the attorney’s prior involvement with the programs creates both a conflict of interest and a need for him to serve as a witness.”
• “Timothy Wiseman, Wiseman Ministries Inc. and Wiseman Transport LLC said in a reply on Monday that plaintiffs’ counsel’s pre-suit involvement with the programs, including recommending them to clients and facilitating a participant’s placement, creates a conflict of interest and makes him a necessary witness in the case.”
• “‘Plaintiffs’ admission that their counsel recommended defendant Wiseman Ministries’ Recovery Programs to individuals, and even facilitated the placement of a current opt-in plaintiff into one of those recovery programs, is precisely the type of situation where the standard is met and disqualification becomes appropriate,’ the program operators said. “
• “In their filing, the program operators take aim at attorney J.D. McMullen’s prior relationship with the programs at issue. According to the filing, McMullen is a necessary witness, because he is ‘the only person who can corroborate, or refute, the statements made to him about pre-admission expectations for participation in a Recovery Program for a current opt-in Plaintiff.'”
• “The program operators rejected the plaintiffs’ proposal to limit any disqualification to trial, arguing that such a remedy would fail to address the broader impact of the counsel’s role in discovery and case strategy. The reply also emphasizes an alleged conflict of interest, asserting that the counsel’s prior endorsement of the recovery programs ‘materially limits’ his ability to challenge those same programs in litigation.”
• “By referring clients and facilitating participation, the program operators argue, the counsel effectively vouched for the programs’ benefits, creating a ‘substantive conflict’ between his ‘prior conduct and current advocacy.'”
• “They operators further argued that ‘actual prejudice to defendants is already occurring… The prejudice is not hypothetical — Attorney-Witness McMullen possesses information that should be subject to the normal discovery process, but his role (and that of his co-counsel) as an advocate for plaintiffs shields that information from proper examination.'”

“Ex-Thomson Reuters Employee’s Whistleblower Suit Highlights Controversy Over Legal Tech’s ICE Ties” —

• “An ex-Thomson Reuters attorney editor is accusing her former employer of firing her in retaliation for her reporting that the company’s products were being used to unlawfully compile and deliver sensitive data to federal immigration authorities.”
• “In a lawsuit filed last week, the former editor claimed Thomson Reuters sought to ‘make an example of her’ after she led a group of employees in voicing concern over the company’s contracts with the U.S. Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE).”
• “The controversy around Thomson Reuters’ data sharing is not unique in legal tech. LexisNexis parent company RELX and its subsidiary LexisNexis Risk Solutions, has also received pushback over contractual ties to federal immigration authorities.”
• “Since March, Thomson Reuters employees as well as staff from LexisNexis’ brands tied to parent company RELX have voiced their concerns to respective leadership and demanded their companies cut contracts with the federal immigration authorities.”
• “In the lawsuit filed last week, captioned Little v. Thomson Reuters, former senior attorney editor Billie Little claimed she learned Thomson Reuters’ data tools supported immigration enforcement activity in Minnesota. She said she believed the company was knowingly facilitating or contributing to unlawful conduct and violating constitutional protections and state law privacy, data and sanctuary city protections, which could extend to other jurisdictions including Oregon, where her federal lawsuit was filed.”
• “Little and about 200 Thomson Reuters employees voiced their concern that the company’s products might be being used in ways that violated the law in an open letter to Thomson Reuters’ executive leadership and board of directors.”
• “‘Thomson Reuters products may be used in ways that conflict with state and local laws in sanctuary jurisdictions, as well as data protection and privacy regulations at multiple governmental levels,’ the letter said. ‘When investigative tools enable federal agencies to access data in ways that circumvent state and local privacy protections, we risk facilitating violations of laws that fall under the jurisdiction of state attorneys general, local prosecutors and data protection authorities.'”
• “The letter requested transparency, due diligence disclosures, safeguard information and an all-hands meeting. Little claimed Thomson Reuters launched an internal investigation into her after the letter was received, then fired her for a supposed code of conduct violation, which Little asserted was pretext to disguise retaliation.”
• “In a statement responding to Little’s allegations, Thomson Reuters said, ‘We take employee concerns seriously and provide clear channels for colleagues to raise issues, as outlined in our Code of Conduct. As this relates to an individual employment matter, it would be inappropriate to comment further. We strongly dispute the allegations and intend to robustly defend the case.'”
• “Little claimed Thomson Reuters’ conduct violated Oregon’s whistleblower protection law.”
• “‘Oregon’s whistleblower law exists for exactly this situation. It protects employees who report in good faith that their employer may be breaking the law,’ Maria Witt, counsel for Little and Albies & Stark of counsel, said in a press release. ‘Thomson Reuters should have thanked Billie for raising concerns about the use of its products instead of hiding behind a vague Code of Conduct violation to punish an employee for exercising rights that Oregon law expressly guarantees.'”
• “The employees’ open letter was not the first incident of Thomson Reuters facing calls to examine its ties with ICE. Thomson Reuters’ long-term minority investor British Columbia General Employees’ Union (BCGEU) said in a statement to Law.com that it has been raising issues similar to those mentioned in Little’s lawsuit since 2020. The union called Little’s allegations ‘deeply troubling.'”
• “Employees under LexisNexis voiced similar concerns about their parent company RELX in an open letter and demanded it cut contractual ties to ICE.”
• “RELX subsidiary LexisNexis Risk Solutions entered into a $22.1 million contract with the DHS in 2021 to provide ICE with a database of public records, and the company has since extended that contract, according to public U.S. spending data.”
• “‘Given ICE’s record, it is clear RELX is doing business with an organization that regularly flouts the ‘rule of law’ principles the company says it upholds,’ the employees’ letter said. ‘We are concerned our employer’s parent company may be aiding threats to our safety, both on the job as journalists and as members of the public, since ICE now has latitude to target people for arrest based on criteria including real or perceived ethnicity or speaking a language other than English.'”
• “Employees also demanded in the letter that executives be transparent about RELX’s contract status, withdraw from the contract if it was renewed and answer employees’ related questions in a town hall.”

“Top law firm apologizes to bankruptcy judge for AI hallucination” —

• “One of Wall Street’s prominent law firms, Sullivan & Cromwell, wrote to a bankruptcy judge to apologize for a court motion that included inaccurate citations generated by artificial intelligence, according to a filing in the US Bankruptcy Court for the Southern District of New York.”
• “In the April 18 apology, Andrew Dietderich, founder and co-head of Sullivan’s restructuring group, said the firm had been made aware of errors in an emergency motion filed in the bankruptcy of Prince Global Holdings.”
• “‘The inaccuracies and errors in the Motion include artificial intelligence (‘AI’) ‘hallucinations,’ according to the letter, which added that the firm had not followed its protocols in preparing the document.”
• “‘We sincerely regret the errors in the Motion and the burden they have imposed on the Court and the parties, and I apologize on behalf of our entire team,’ Dietderich wrote in the letter. The firm said it is taking steps to ensure the accuracy of all submissions.”
  “The law firm represents liquidators overseeing actions against Prince Group, a Cambodia-based conglomerate.”
• “It is very rare for big law firms such as Sullivan & Cromwell to include AI-generated errors in a court filing, said Damien Charlotin, who oversees a database tracking court cases in which an AI hallucination has been verified by a judge or acknowledged by the lawyers involved. More often, the mistakes are made by solo practitioners in cases involving many parties, said Charlotin, who is also a senior research fellow at French business school HEC Paris.”
• “The number of such cases has grown in recent years as AI use has spread, he said. His database shows more than 900 US cases, only a handful of which are in bankruptcy court.”
• “The errors underscore growing concerns about how law firms are using AI and what safeguards they have in place. Judges have reprimanded lawyers in some cases. Last year, a bankruptcy judge publicly reprimanded a former Gordon Rees Scully Mansukhani senior counsel for submitting filings with artificial-intelligence-generated fake citations, although the firm itself avoided court sanctions.”

The specific AI tool or tools used were not disclosed, but Sullivan’s AI practice is very much involved with OpenAI.

And, for technology nerds in the room still reading this far down today’s update, Damien Charlotin’s AI database is fascinating! See his roster of: “AI Hallucination Cases” —

• “This database tracks legal decisions1 in cases where generative AI produced hallucinated content – typically fake citations, but also other types of AI-generated arguments. It does not track the (necessarily wider) universe of all fake citations or use of AI in court filings.”
• “While seeking to be exhaustive (1334 cases identified so far), it is a work in progress and will expand as new examples emerge. This database has been featured in news media, and indeed in several decisions dealing with hallucinated material.”

“Lawsuits Accuse Trio of Am Law 200 Firms of Running Afoul of Conflict Rules” —

• “Recent lawsuits accusing Am Law 200 firms of representing clients despite conflicts of interest highlight the need for both law firms and clients to take steps to avoid conflicts, according to attorneys specializing in legal ethics.”
• “‘Clients are much more offended by conflicts of interest than law firms and judges give them credit for,’ said Frankfurt Kurnit Klein & Selz partner Ronald Minkoff. ‘When they find out that there’s been a conflict of interest that may have affected the outcome of the case, they get pretty upset.'”
• “Another case, brought in New Jersey federal court by Axenfeld Law Group on behalf of car repair company Empire Auto Protect, accuses Dickinson Wright of simultaneously representing a competitor and Empire and of using Empire’s confidential information to file a trademark case against the company.”
• “A third suit, brought by Bruck McInerney on behalf of Susan Glikin in Cook County, Illinois, accuses Kattne Muchin Rosenman of fraudulent concealment and legal malpractice. According to the complaint, the law firm represented both Susan Gilkin and her husband, James, when they revised their estate plans in 2017 and 2018. Susan alleges that she learned after she filed for divorce in 2024 that the revised plan strongly favored James, putting tens of millions of dollars that otherwise would have been marital property beyond her reach.”
• “The ethical responsibility to avoid conflicts lies with the law firm, and the client has to rely on trust to some extent, Minkoff said. ‘There isn’t always all that much that a client can do,’ he said. ‘They can do their own search on Lexis and attempt to see if at some point the law firm represented the other side, but most clients don’t do that.'”
• “Matthew Henderson, a partner at Hinshaw & Culbertson, agreed that avoiding conflicts is ‘mostly on the law firm.'”
• “Henderson added: ‘It needs to be more than just a perfunctory running of the conflicts. If the firm is found to have represented someone adverse to the client in the past, he recommends interviewing the lawyers to learn more.”
• “Sophisticated clients may agree to waive some conflicts in advance, and as long as those waivers are narrowly tailored, courts usually uphold them, Henderson said. But blanket advance waivers of any conflicts are generally unenforceable.”
• “In instances where clients conclude early on that the attorney representing them is conflicted, they can opt to waive the conflict or part ways with the attorney and request their money back.”
• “If the potential conflict spills into court, a party might file a motion to disqualify, which, if successful, might lead it to sue the allegedly conflicted firm to recover their legal costs.”
• “A client can also bring a lawsuit like those flagged by Radar, with claims for malpractice, negligence or breach of fiduciary duty, Henderson said.”

“Pot Co. CFO Says Attys Must Be DQ’d In Embezzling Suit” —

• “The former CFO of four related cannabis companies, who is accused of embezzling from those companies, is urging a California state court to disqualify the plaintiffs’ attorneys, saying there is a conflict of interest between the company plaintiffs and the individual plaintiffs.”
• “In a motion filed Monday, Ramin Benyamini said the Darling & Wilson PC attorneys should be disqualified from the suit against him, as the individual plaintiffs are all officers and shareholders of the entity plaintiffs, and the entity plaintiffs could have claims against them that won’t be pursued if they’re represented by the same attorneys.”
  The individual plaintiffs — Ashkan Motamen, Ali Ghazi, Eric Nomura and Michael Kumar — allege that Benyamini stole and appropriated funds while he was CFO of the entity plaintiffs, Luvbrite Collective, All Dots Connect Media Inc., LB Distro LLC, and Green Mind LLC. The suit also names as defendants a number of other entities and individuals they say helped Benyamini through a scheme involving fictitious loans, reporting false inventory and sales numbers, and other ‘phantom transactions’ to hide the movement of the funds.”
• “In Monday’s motion, Benyamini said that each of the individual plaintiffs had a fiduciary duty to oversee the entities and prevent his alleged misconduct, and as such the entity plaintiffs have potential claims against the individual plaintiffs.”
• “But with Darling & Wilson representing both sets of plaintiffs, those claims will never be brought up, Benyamini told the court, saying California’s appeals courts have recognized that such conflicts are especially problematic in the case of corporations that are owned by a small group of shareholders, such as is the case here.”
• “Where the only shareholders are also the officers and directors involved in such a dispute, allowing them to consent or attempt to waive such a conflict would render rules about conflicts of interest meaningless, Benyamini told the court.”
• “‘The entities’ independent interests in pursuing claims against their own management are being subordinated to the individual plaintiffs’ interest in presenting a united front against defendant Benyamini,’ he wrote. ‘This is precisely the harm that the concurrent conflict rules are designed to prevent.'”
• “This conflict cannot be waived, Benyamini wrote, as court rules prohibit representation even with consent where the attorney can’t provide proper representation to each affected client, and in this case, Darling & Wilson can’t represent the entity plaintiffs while also representing the individuals who those entities may have a claim against.”
• “Benyamini further argued that he has standing to seek disqualification because, as CFO and a substantial shareholder in the four entities, he has a substantial interest in ensuring that they’re properly represented.”